Unconventional Gas

Fast facts

In 2015, unconventional gas currently accounted for approximately 40 per cent of Eastern Australian gas production.

Currently 100 per cent of produced unconventional gas is coal sean gas (CSG), however shale gas is a potentially large future resource.

The commercial production of CSG commenced in the USA in the 1970s

Exploration for CSG in Australia began in 1976 in Queensland's Bowen Basin.

The first stand-alone commercial production of CSG in Australia commenced in December 1996 at the Dawson Valley project (then owned by ConocoPhillips), adjoining the Moura coal mine.

In a world’s first, the three LNG facilities in Queensland are using CSG as the supply source.

Not all unconventional gas wells undergo hydraulic fracturing. In Australia, the technique is used in CSG production 20-40 per cent of the time.

CSG and shale gas have very different production techniques. Shale gas is deeper (much further below aquifers used by agriculture), all wells need fracturing and it produces less water to the surface. The infrastructure needs and potential impacts are therefore very different to CSG.

What is it?

Unconventional gas is a term commonly used to describe coal seam gas (CSG), shale gas and tight gas. These are all forms of natural gas (primarily methane) but sourced from different geological formations. This gas is used in the same way as conventional natural gas is used for generating electricity and heating in homes. It is also a critical input for the production of chemicals, plastics, pharmaceuticals, fertilizers, paints, pesticides and cosmetics.

Coal Seam GasFound in coal seams, typically 300–1000 meters underground. CSG is held in place by water pressure and is extracted via wells drilled through the coal seams. When the water pressure is reduced, natural gas is released from the coal. The gas is then processed to remove water and piped to compression plants for transportation via gas transmission pipelines to power stations, industry and domestic gas customers.

Shale gasRefers to methane that is trapped within layers of shale rock of depths greater than 1500 meters below the surface. In Australia, the industry is largely in the exploration stage; that is, drilling vertical wells in prospective areas, and using hydraulic fracturing (fracking) to determine whether gas production is likely to be economically viable.

Tight gasRefers to gas held in sandstones and limestones of low permeability and low porosity. Because of this low permeability, gas cannot migrate out of the rock and therefore, tight gas must be extracted through hydraulic fracturing. The tight gas industry is largely in the exploration stage.

The Australian Government’s position on Unconventional Gas Development

A key goal of the Australian Government’s energy policy is to maintain a secure and sustainable energy supply while facilitating competitive and productive industry sectors. Unconventional gas development is already central to achieving this goal, and an issue of national importance, as it has the potential to impact Australia’s prosperity. In 2015, over 40 per cent of the Eastern Australian domestic gas production was sourced from CSG and this production is expected to continue to grow to support domestic consumption and LNG exports from the East Coast.

The Australian Government takes an evidence-based and holistic approach to unconventional gas development with science at the center of all decision making and regulation. This approach also includes careful consideration of economic, social, environmental factors and world leading-practices.

Domestic Gas Strategy

The Domestic Gas Strategy outlines the Australian Government’s role, and expectations of the State and territory governments (the States) and industry, in facilitating the responsible development of unconventional gas resources. The Australian Government will contribute to the development of unconventional gas resources by:

Improving gas markets to enable better access and price discovery for all market participants including customers

Understanding and responding to potential social impacts to build confidence that community needs and expectations will be properly considered

Understanding and communicating the science to build confidence in the community that risks and environmental impacts can be managed

Demonstrating the macroeconomic benefits to build community confidence

Learning from mistakes and successes of other jurisdictions through sharing knowledge.

The Domestic Gas Strategy will inform discussions with the States, who have the primary responsibility for onshore gas development, on ways to address unnecessary barriers to bringing on new gas supply.

The Strategy’s implementation is overseen by a collaborative committee made up of relevant government departments and agencies. The first annual progress report on for implementing the Domestic Gas Strategy is now available.

Role of the Australian Government and State and Territory governments

Under the Constitution, ownership of mineral and petroleum resources onshore and within three nautical miles offshore vests with the state and territory governments – states have passed laws to manage land allocation which generally specifically withholds mineral rights to the Crown, and mechanisms to allocate those rights separately. The Constitution is silent on mining and therefore consistent with this understanding.

There are some ways for the Commonwealth government to affect mineral production and trade through: interstate and overseas trade and commerce; taxation; defence; corporations; Aboriginal people; and external affairs. But the Constitution also provides limits to those heads of powers, such as “just terms” in the event of acquisition of state petroleum resources, the need to not discriminate between states and prohibition on taxing on state resources. Given the potential mix of federal and state roles at points in resource development, policy coordination is important, and generally is driven through the COAG Energy Council.

To find out more about your States’ regulatory frameworks, support mechanisms and other work on unconventional gas, please visit:

As the Chair of the Council of Australian Governments (COAG) Energy Council, the Australian Government plays an important leadership role in the gas market reform agenda. One way the Government does this is by maximising public access to its research capabilities and resources, which includes: environment research capabilities, information on national economic gains and the local impacts of unconventional gas development. The Government also helps drive the development of leading practice regulatory frameworks associated with the development of unconventional gas.

On 4 December 2015, the Council of Australian Government's Energy Council released its Gas Supply Strategy to improve social, economic and regulatory outcomes.The Gas Supply Strategy is the Council's commitment to deeper collaboration on:

Improving information on gas reserves and production potential.

Improving public availability and accessibility of rigorous science and factual information.

Consideration of leading practice regulatory frameworks that effectively manage the risks and address issues for all conventional and unconventional gas resources.

Supporting leading practices in industry to support responsible development.

These four opportunities for collaboration are intended to improve collective understanding of the issues associated with a rising reliance on gas from unconventional reservoirs, improve the information available to the community and regulators on development activities, and lead to refinements to existing Council frameworks.A detailed implementation plan will be developed in the first half of 2016 in consultation with stakeholders. The Council will also communicate its expectations in those areas where it considers industry should be showing greater leadership, collaboration and consultation.

The COAG Energy Council Gas Supply Strategy and further information is available at the COAG Energy Council govspace.

At the 31 May 2013 the Standing Council on Energy and Resources - now the COAG Energy Council - comprising Australia’s Energy and Resources Ministers endorsed the National Harmonised Regulatory Framework for Natural Gas from Coal Seams.

The Framework is a guidance and reference tool for Australian government regulators for the CSG industry. Its purpose is to provide a suite of national and global leading practices to consider and implement in the assessment and ongoing regulation of proposed projects for CSG exploration and production. The Framework is not intended to be a static document. Effective inter-governmental cooperation and proactive international partnerships will continue its development. Consistent with this approach, the Framework also acts as a guide to industry on what leading practice regulation is, providing greater certainty and consistency for CSG operators.The work programme was selected to address issues of community concern regarding the following core areas:

well integrity and aquifer protection

water management and monitoring

hydraulic fracturing

chemical use.

The work programme and public consultation information is available on the COAG Energy Council website.

Environmental protection

Primary responsibility for regulating environmental impacts associated with the resource sector rests with state and territory governments.

The Australian Government plays an important role in protecting our environment from potential impacts of development activity, with a focus on matters of National Environmental Significance under the Commonwealth’s main piece of environment legislation, the Environment Protection and Biodiversity Conservation Act (1999) (EPBC Act). The Department of the Environment has oversight of resource development approval processes through administration of the EPBC Act.

In the case of development activity related to CSG, this includes the protection of water resources. Before taking an action that could have a significant impact on any matter protected by the EPBC Act, including nationally and international important flora, fauna and ecological communities, the proposed action must be referred to the Australian Government Minister for the Environment for assessment and approval.For more information see:

Economics

The Department of Industry, Innovation and Science’s vision is to enable growth and productivity for globally competitive industries. To help realise this vision, the department has four key objectives: supporting science and commercialisation, growing business investment and improving business capability, streamlining regulation and building a high performance organisation.

In relation to unconventional gas, the department provides policy advice to government on related resource extraction and energy policy, drawing on the expertise of its science agencies. It also works collaboratively with the state and territory governments on national reforms through the Council of Australian Government’s (COAG) Energy Council, which is chaired by the Australian Government Minister for Resources, Energy and Northern Australia.

Studies weighing the social, environmental and financial costs and benefits of resource development help regulators and other stakeholders to make prudent decisions that strike the right balance. Studies include:

Land Access

The Australian Government recognises that land access is an important issue for landholders.

The agriculture sector is one example where the Australian Government has expressed the need to balance the interests of the unconventional gas sector and other industries. State governments have primary responsibility for land access issues, and have legislation and other arrangements in place. The Australian Government’s has three coexistence principles that stress the need for farmer agreement, fair compensation, and no long term impacts to agricultural land and groundwater.

The Multiple Land Use Framework, developed by the Standing Council on Energy and Resources - now the COAG Energy Council - helps to address challenges arising from competing land use, land access and land use change. The aim of the Framework is to enable governments, community and industry to effectively and efficiently meet land access and use challenges, expectations and opportunities. Jurisdictions refer to the framework to guide the development of their respective land access policies and legislation. While jurisdictional positions on land access differ, their regimes are broadly consistent with this framework.

Science and Research

The Australian Government is committed to strengthening the science on potential impacts of unconventional gas development. The Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development (IESC) provides advice to Australian government regulators on the water-related impacts of CSG and large coal mining development proposals. This ensures decisions are based on the best and available science.

Regional scale management of CSG and large coal mining development is informed by bioregional assessments being undertaken in areas subject to development pressure. These provide baseline information and assess cumulative impacts. New research relating to CSG and large coal mining development is improving our understanding and management of the impacts of coal and CSG extraction projects on water resources.

The Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development (IESC) was established as a statutory committee in 2012 under the Environment Protection and Biodiversity Conservation Act 1999.

In 2011, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) established the Gas Industry Social and Environmental Research Alliance (GISERA). The main object of the GISERA is to provide the natural gas industry, government and community with quality assured scientific research to better understand the social and environmental challenges and opportunities of Australia’s onshore natural gas industry. The research findings are made freely available both on the GISERA website and in a range of community engagement forums. The Australian Government has endorsed the GISERA model, and on 11 August 2015, with the New South Wales Government, announced $3 million funding through the CSIRO to extend GISERA’s scope into New South Wales.

Engage with us

The Australian Government is committed to working collaboratively with stakeholders to facilitate the responsible development of the unconventional gas industry. Please contact us if you cannot find what you are looking for and or if you have any questions.

The department acknowledges the traditional owners of the country throughout Australia and their continuing connection to land, sea and community. We pay our respect to them and their cultures and to the elders past and present.